What is the main purpose of the repo rate fixed by the Reserve Bank of India?
What is the main purpose of the repo rate fixed by the Reserve Bank of India?
Solution
✅ Correct Option: 3
The repo rate is the rate at which the RBI lends short-term money to banks against eligible securities. By changing it, the RBI can influence bank borrowing costs, credit conditions and liquidity in the banking system.
Option 1: Minimum wages come under labour law and government wage policy, not RBI monetary policy.
Option 2: SEBI regulates the securities market, but share prices are set by buyers and sellers in the market.
Option 4: The fiscal deficit is the government's budget gap and is managed mainly through taxation and government spending.
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